I agree with the intention of your point, but TIPS are pegged to official inflation. Making predictions about the 10 year real return on TIPS bakes in serious assumptions about the future political environment in the US.If I'm deciding that someone's argument passes the "vaguely plausible test", any flat prediction about any outcome over a 10 year period that isn't something like "my 10 year TIPS will return X in 10 years" causes me to discount it. I think 10 year projections about any class of stocks is particularly problematic.Yes, exactly. You don’t have to bother picking up the next big thing in technology. Just index & ride out the volatility that comes with it and you will come out ahead over any period of 10+ years.If you kept indexing technology stocks, you did extremely well. The leading companies changed over the years, but the sector has been very strong.You're right that a lot of money was made in tech stocks prior to the 21st century (in names like IBM, Xerox, Digital Equipment Corp., Compaq, Novell, Intel, AOL, Sun Microsystems, etc.). But most of the money was made by people who invested prior to them becoming the "obvious" choices. What happened to people who had a high concentration in those names after they already had strong run-ups?
Technology stocks go back a century. Humans didn't start developing technology two decades ago.
We see repeatedly that it's better to be overweight tomorrow's Wall Street darlings than the current ones. Are you?
There's a long list of countries with low official inflation, but high actual inflation and it's absolutely within the realm of possibility that the US could join that list, at least for a period of time. The non-zero left tail risk that TIPS returns could become pegged to an imaginary inflation number (pushing real returns on TIPS negative) makes it extremely hard to predict real returns on TIPS, especially for longer time periods.
Statistics: Posted by msterrr — Tue Jul 09, 2024 10:02 am — Replies 6436 — Views 1622453